Herb Greenberg On The 'Golden Era' Of Business Journalism / Doug Kass' monthly letter / Liz Holmes Wants You to Forget About Elizabeth / I'm flying to Rome tonight for the Italian Open
1) My friend Julia La Roche interviewed my colleague Herb Greenberg this week.
In it, they covered how he got into business journalism (2:40), his big break (10:25), the story Herb never talks about (18:08), the best question anyone has ever asked him (34:55), red flags (42:00), generative AI (53:50), and more.
You can stream it on your favorite podcast app or watch it here: Herb Greenberg On The 'Golden Era' Of Business Journalism.
2) In yesterday's e-mail, I included a link to a website with links to the first-quarter letters of roughly 50 hedge funds.
But the site had a glaring omission – the latest letter from my friend Doug Kass of Seabreeze Partners, who always has great insights – so I've posted and link to it here. Excerpt:
For many reasons, most notably the relationship between the S&P and Nasdaq Indices compared to interest rates (highlighted below), Seabreeze has moved into a small net short exposure in equities:
* On Friday the Federal Funds Rate stood at 5.08%, the S&P Index closed at 4,136 and the consensus 2023 S&P EPS is projected at $224/share (which we view as to optimistic!).
* On 2/24/22 the Federal Funds Rate was at only 0.08% at the time the S&P Index closed at 4,117 and when the forecasted 2023 S&P EPS was projected to be considerably higher (at $244/share)...
My intermediate- to longer- term concerns are multiple and growing (particularly as stock prices climb):
1. A mountain of public debt and a continuing (and out of control) U.S. deficit.
2. The likelihood that inflation will be difficult to arrest.
3. The failure of policy to address supply issues of important commodities (especially oil).
4. The absence of cooperation between the world's economic powers.
5. The growing probability that interest rates (and the cost of capital) will remain elevated - placing pressure on corporate profitability and stock valuations.
6. The end of globalization augurs poorly for corporate profit margins...
We have been through among the most speculative periods in history - which came to an abrupt end in late 2021.
At Seabreeze we suspect we may have entered year two of several anticipated lean investment years - much like the 1974-81 period following the end of The Nifty Fifty... A period of slugflation (sluggish global economic growth and elevated inflation) forms the foundation of our market concerns.
For now, and perhaps for the several seasons ahead, a traditional buy and hold strategy seems sub optimal.
I'm more bullish than Doug, but I always like to hear contrary opinions...
3) A week and a half ago, a gullible New York Times reporter published a ridiculous puff piece on convicted fraudster Elizabeth Holmes: Liz Holmes Wants You to Forget About Elizabeth. Excerpt:
Elizabeth Holmes blends in with the other moms here, in a bucket hat and sunglasses, her newborn strapped to her chest and swathed in a Baby Yoda nursing blanket. We walk past a family of caged orangutans and talk about how Ms. Holmes is preparing to go to prison for one of the most notorious cases of corporate fraud in recent history.
In case you're wondering, Ms. Holmes speaks in a soft, slightly low, but totally unremarkable voice, no hint of the throaty contralto she used while running her defunct blood-testing start-up Theranos.
"I made so many mistakes and there was so much I didn't know and understand, and I feel like when you do it wrong, it's like you really internalize it in a deep way," Ms. Holmes said as we stopped to look at a hissing anaconda.
Billy Evans, Ms. Holmes's partner and the father of their two young children, pushes a stroller with the couple's 20-month-old son, William. William enjoys playing in the sand, "The Little Blue Truck," dumplings and, like his mom, already speaks some Mandarin.
But William especially loves the San Diego Zoo, which is why, on a recent Thursday afternoon, I found myself in the surreal situation of trying to make sense of Ms. Holmes's version of her rise and fall, while watching a restless cheetah and buying a gorilla T-shirt at the gift shop.
I sort of understand, though... If I'd committed her crimes, I'd try to persuade a reporter to write a story entitled Whit Tilson Wants You to Forget About Whitney! But that's usually not the way the world works...
Fortunately, a judge wasn't fooled by Holmes' charade, and yesterday denied her request to remain free while she files endless appeals: Theranos Founder Elizabeth Holmes to Report to Prison May 30. Excerpt:
Theranos founder Elizabeth Holmes must report to prison by May 30, a judge said Wednesday, after a court denied her request to stay out pending appeal.
The U.S. Court of Appeals for the Ninth Circuit on Tuesday denied her request to stay out on bail, saying Holmes's appeal doesn't raise a substantial question of law and that even if it did, it is unlikely that it would be enough to overturn her fraud conviction.
Holmes, the disgraced founder of blood-testing startup Theranos, was convicted of wire fraud and conspiracy to commit wire fraud against the company's investors in January 2022. She was sentenced to more than 11 years in prison.
Later Tuesday, Holmes and her former second-in-command Ramesh "Sunny" Balwani, who was also convicted of fraud at Theranos, were jointly ordered by a lower court to pay $452 million in restitution to investors, including $125 million to Rupert Murdoch, executive chairman of News Corp, which owns The Wall Street Journal.
4) I'm flying to Rome tonight to join one of my oldest friends to see the last three days of the Italian Open, the last major tennis tournament before the French Open, which starts in 10 days.
Tomorrow, we'll see the women's semis, on Saturday, the men's semis around the women's final, and then, the men's final on Sunday before flying home Monday.
In the women's semis, I'll be cheering for the Ukrainian of course: 26-year-old, 30th-seeded Anhelina Kalinina, ranked No. 47 in the world, who will face off against 11th-seeded (and 12th-ranked) Russian Veronika Kudermetova.
I've packed my "Russian military ship go f**k yourself" t-shirt as well as a big Ukrainian flag and three little flags for my friends and me to wave during the match on Friday (and hopefully the final on Saturday). Slava Ukraini!
